Digital Transformation (DX)
DX has been a buzzword in Japan for quite some time. Numerous DX consulting companies and SaaS products promise to help businesses transition from analog to digital processes. Many companies have established DX departments with substantial budgets for transformation initiatives. However, in reality, many of these initiatives are merely superficial changes that fail to truly transform core processes. In other words, it's often DX for the sake of DX.
Example 1: The Seal (Inkan 印鑑) Conundrum
The seal (Inkan) is the backbone of Japan's business world. Every document requires a seal for approval, whether it's from your boss, your company, or the government.
The COVID-19 pandemic normalized remote work, and many companies started allowing employees to work from home. However, numerous businesses still require employees to come into the office to obtain necessary seals. This is because the process of getting a seal is inherently analog and requires physical presence.
Innovation came in the form of digital "seals," similar to e-signatures. Yet, the process remains fundamentally analog, as you still need to obtain seals from all parties involved.
Example 2: DX for Show
In one company, the DX department needed to spend its budget on initiatives to demonstrate results to management. The focus was more on showcasing DX efforts rather than implementing meaningful digital transformations.
Digital Analog (デジログ Digilog)
During conversations with friends working in Japanese banks, they often describe DX initiatives that merely convert analog processes into digital form without addressing the root causes of inefficiency.
This trend has generated a large industry of SaaS products that help companies digitalize analog processes without fundamentally changing them. For instance, in the construction industry, companies used to deal with extensive paperwork for projects. Now, thanks to SaaS products, workers "only" need to carry a tablet to the construction site and input information digitally. However, the process remains essentially analog, with information still being entered manually into the system.
I've experienced this firsthand when filling out numerous forms and surveys in Japan. Often, these forms are created in Excel files. It's unclear how the results are utilized, but if data accumulation is necessary, someone must manually enter the data from all the Excel files into a central system—another form of Digital Analog process.
This approach to digitalization often results in a superficial transformation that fails to address underlying inefficiencies or truly leverage the potential of digital technologies.
Conclusion: The Path Forward
The challenges of DX in Japan highlight a broader issue: the struggle to embrace true digital innovation rather than merely digitizing existing processes.
While the shift from analog to digital is a necessary first step, it's crucial to recognize that genuine transformation goes beyond surface-level changes. True DX involves reimagining workflows, challenging established norms, and leveraging technology to create more efficient, flexible, and innovative business models.
But I can not see the future of Japan without Inkan.